The Unicorn Stink

Unicorn stink: Remember the innocent days of Q3 2015, when two or five new unicorns would get their horns every week? Billion-dollar rounds were so frequent they started to feel a little pedestrian. “Don’t congratulate me for raising venture money” became a meme.

Qualtrics ceo Ryan smith: congratulating me for raising VC is like congratulating someone for taking out a mortgage. #FortuneTech

— Dan Primack (@danprimack) July 14, 2015

No more. We’re at the point in the boom-bust cycle where closing a large round of funding is worthy of celebration. Cue #CongratsTwitter.

One startup CEO that recently raised a big round told me he felt like Indiana Jones, reaching in to grab his hat a split-second before a giant concrete door closes.

Another one boasted that the days of “growth at all costs” are over—VCs only want to invest in startups with “healthy” growth. Neither of these CEOs run billion-dollar unicorns, a fact they were both eager to share. (“Far from it!” one cheerfully exclaimed.) Not being a unicorn is the new unicorn.

VCs are avoiding unicorns. And that’s only if they’re are investing at all—many VCs are telling entrepreneurs that they’re “heads down focusing on their current portfolio right now.” I can’t help but think of that trope about how venture capitalists end up spending the majority of their time trying to save their worst-performing portfolio companies…

It’s not just the VCs. Silicon Valley worker bees are wary of unicorns now, too. Engineers, the mother’s milk of the Valley, are suddenly asking wonky business questions about things like unit economics in job interviews. Considering that recruiting was a top reason that the unicorn CEOs were so desperate to trumpet their billion-dollar valuations in the first place, that’s a bad sign. (For more on engineers avoiding unicorns, read “Profits On Order,” my magazine column that went online yesterday.)

Meanwhile my inbox is flooded with pitches from executives and startups wanting to discuss bootstrapping and the virtues of slow growth. It’s a weird paradox—they want to be associated with unicorns, but without any of that negative unicorn stigma.

The thing those startup execs don’t yet realize is that, to the rest of the world—customers, potential employees, media, public market investors—tech startups are one monolithic, intertwined entity. The stink of rotting unicorns does not discriminate from one startup to the next—it gets on everyone.🌈

Death By Algorithm: Instagram is going algorithmic, changing up the reverse-chronological order of its content. When Twitter announced it would do the same thing, users revolted, declaring the end of Twitter and elevating the hashtag #RIPTwitter to a Trending Topic. The company responded by making the feature optional.

I’ve seen some complaining about an Instagram algorithm, but I think the company will get away with it without too much push-back. And even if that pushback happens, I doubt the company will cave. Facebook is known for sticking to its guns when users complain—remember the boycotts when the company introduced the News Feed?

So why does Instagram need this? Because the company needs us to follow more accounts than just our friends and family. If they shove ads between photos of our cousin’s vacation, our best friend’s brunch, and our neighbor’s dog, it feels out of place. But if we follow professionally produced accounts from lifestyle bloggers, brands, celebrities, media outlets and influencers, an ad from Chase isn’t going to feel out of place.

The problem comes when we clutter up our feeds with all that noise. We’re bound to miss the important stuff—Instagram says we miss 70% of the content in our feeds—and maybe we stop coming back to Instagram every day. According to a study done by one analytics firm, interaction rates on Instagram dropped by 40% in 2015. An algorithm will give Instagram control of the feed, and the ability to show us just the right amount of friends mixed with professionally produced content (and naturally, ads).

For all that users complain about Facebook’s constant algorithm tweaks, they work. Facebook deepens its engagement with users every quarter. 💥

READ this horrific account of online harassment.

SKIM this profile of Imgur, the image-sharing site.

SKIP this and every “think piece” about SXSW. (Can you tell I have FOMO because I didn’t go this year?)

When you get bored with a conversation at #SXSW pic.twitter.com/ITMfNiyhNO

— Greg Galant (@gregory) March 14, 2016

Nike had a big day. (Its shoes now tie themselves.)

On-demand parking apps had a little day. (Turns out their model doesn’t quite work.)

LivingSocial had a day. (Yes, it still exists, and it just laid off half of its staff.)

https://twitter.com/kanyewest/status/709407505835753472

The thing you missed on Twitter is Joe Scarborough doubling down on his sexist comment to Hillary.

The hot new startup is Anchor, an app that’s like Twitter, but for audio messages.

Proof of our impending death is corporate meditation.💥